Cameron's tax tangle: After attack on avoidance, he backs down in fear of opening Pandora's Box

David Cameron was in full retreat over his condemnation of celebrity tax avoiders last night, following warnings that his attack on Jimmy Carr could open a Pandora’s Box.

The Prime Minister refused to criticise the tax affairs of Take That star Gary Barlow, despite allegations that the singer was involved in a similar scheme to the one Carr used to cut his liabilities.

Some senior Tories feared Mr Cameron’s intervention could lead to an unwelcome media spotlight on the tax affairs of party donors and even ministers.

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The Prime Minister was quick to criticise Jimmy Carr over his tax arrangements

Yesterday the Prime Minister said he would no longer be giving a ‘running commentary’ on the tax affairs of the wealthy, adding that his outspoken criticism of Carr on Wednesday had been an ‘exception’.

But a day after criticising Carr, Mr Cameron refused to condemn Barlow, a Tory supporter who was recently made an OBE.

He said: ‘I am not going to give a running commentary on different people’s tax affairs. I don’t think that would be right.

‘I made an exception yesterday because it was a very specific case where the details seemed to have been published and it was a particularly egregious example of an avoidance scheme that seemed to me to be wrong and I made that point.’

Mr Cameron’s backtracking came after warnings his decision to brand Carr’s behaviour ‘morally wrong’ could lead to a repeat of John Major’s infamous ‘back to basics’ campaign, which backfired when it drew attention to the morals of senior Tories. Downing Street was yesterday struggling to answer questions about precisely what constituted ‘morally wrong’ behaviour.

Angela Eagle has suggested Barlow has escaped criticism because he is a Tory supporter

A spokesman was asked whether the description applied to middle-class parents who gift money to their children to avoid inheritance tax. They also had to field questions about the tax arrangements of the Prime Minister’s late father.

Tax campaigner Richard Murphy said the Prime Minister had opened a Pandora’s Box which could ultimately lead to the door of senior Tories. Mr Murphy, of Tax Research UK, said: ‘Mr Cameron now seems to have realised that by raising this there will be an awful lot of issues affecting people in the Conservative Party. People might even ask questions about his dad.’ One Tory MP described the episode as ‘humiliating’, adding: ‘You can’t have the Prime Minister making random attacks on individuals, particularly if they are going to back down the following day.’

Former Lib Dem Treasury spokesman Lord Oakeshott said: ‘When you lift the stone on tax avoidance by Britain’s rich and famous it is nauseating what crawls out.

‘George Osborne was dead right to call aggressive tax avoidance “morally repugnant” in the Budget. So what are he and David Cameron going to do about it apart from selective condemnation of comedians who are not Tory donors?’

Mr Cameron said yesterday: ‘Some of these aggressive anti-avoidance schemes that may not be illegal are morally questionable.’

Shadow leader of the house Angela Eagle said: ‘Oddly, Mr Cameron did not take the opportunity to condemn as morally repugnant the tax avoidance scheme used by Conservative supporter Gary Barlow.